Blog Exposure - NeoPhotonics Issues Press Statement Detailing the Impact on its Business Due to the US Department of Commerce Ban on ZTE

LONDON, UK / ACCESSWIRE / April 19, 2018 / Active-Investors.com has just released a free research report on NeoPhotonics Corp. (NYSE: NPTN). If you want access to this report all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=NPTN as the Company's latest news hit the wire. On April 17, 2018, the Company issued a press statement following the US Department of Commerce's activation of the Denial Order on April 16, 2018 against Chinese telecommunications equipment manufacturer ZTE. Register today and get access to over 1,000 Free Research Reports by joining our site below:

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The denial order bans American companies from selling, exporting, or re-exporting components, software, and technology to ZTE. NeoPhotonics is a designer and manufacturer of advanced hybrid photonic integrated optoelectronic modules and subsystems for bandwidth-intensive, high-speed communications networks. NeoPhotonics has disclosed that the direct revenue earned by the Company from ZTE in fiscal year 2017 was approximately 1% of its total revenue. Additionally, the Company supplies product components to come of the supply chain partners of ZTE. In FY17, the revenue from the sale of the product components was roughly around 3% of its total revenue.

If the BIS denial order had not been issued, the Company believes that its revenues from supplying to ZTE and its supply chain partners would have grown significantly. However, due to the denial order, the Company which was expecting an increase in its annualized revenue by 5% will not materialize. The Company has said that its inventory of products meant for ZTE valued approximately $1.5 million as on March 31, 2018, will now be written off as loss in its Q1 2018 results.

Backdrop

The US Department of Commerce's Bureau of Industry and Security (BIS) on April 16, 2018, had imposed a denial of export privileges against Zhong Xing Telecommunications Equipment Corporation, of Shenzhen, China (ZTE Corporation) and ZTE Kangxun Telecommunications Ltd of Hi-New Shenzhen, China (ZTE Kangxun) (together referred to as ZTE) for violating terms in a sanctions violation case. As per the order, the export privileges including re-exports by ZTE will be fully suspended for seven years till March 13, 2025. Additionally, the BIS ban prevents ZTE from accessing US technologies covered under Export Administration Regulations (EAR). Accordingly, American companies have been banned from selling components to ZTE for the duration of the ban.

In March 2017, ZTE had officially pleaded guilty to conspiring to violate US sanctions by illegally shipping US goods and technology to Iran. It agreed to pay $890 million in fines plus additional penalty of $300 million. As part of the settlement, ZTE had agreed to a possible seven-year suspended denial of export privileges if it did not meet the conditions of the settlement or committed additional violations of EAR.

In February 2018 when BIS sought additional documentation regarding the promised disciplinary action by ZTE against some of its employees, ZTE's response revealed that it had breached the settlement agreement by giving false statements and had failed to take disciplinary actions against four senior employees and 35 other employees originally identified as responsible for engaging in the illegal conduct. ZTE had dismissed the four senior employees but failed to discipline or reduced bonuses of the 35 employees. As ZTE had misled the Department of Commerce and made false statements, BIS imposed the seven-year export ban.

ZTE manufactures networking equipment and smartphones and nearly 25% to 30% of the components used by ZTE is supplied by American companies.

About NeoPhotonics Corp.

San Jose, California-based NeoPhotonics is a leading designer and manufacturer of advanced hybrid photonic integrated optoelectronic modules and subsystems for bandwidth-intensive, high-speed communications networks. The Company's products are designed to enable cost-effective, high-speed data transmission and efficient allocation of bandwidth over communications networks. The Company's high speed 100G and beyond products are based on its Advanced Hybrid Photonic Integration technology and support encoding 100 gigabits or more per second of information for transmitting over a single channel and decoding the information at the receiver. Its Network Products and Solutions are designed for use in optical communications networks and a variety of other applications that use data rates that are less than 100Gbps, including 40G, 10G and lower data rates.

The Company has engineering and manufacturing facilities that are ISO 9001:2008 certified at Silicon Valley in US, Japan, and Shenzhen in China.

After yesterday's close, NeoPhotonics' market cap was at $286.84 million.

The stock is part of the Technology sector, categorized under the Semiconductor - Broad Line industry.

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